1. Which topic is studied in macroeconomics?

	A.	recessions
	B.	the unemployment of workers displaced by technological change in the typesetting industry
	C.	the change in automobile sales due to a change in the price of automobiles
	D.	the effect of a tax reduction on the profits of an individual business

4 points

QUESTION 2

1. The basic concern of microeconomics is to:

	A.	prove that capitalism is better than socialism.
	B.	keep business firms from losing money.
	C.	study the choices people make.
	D.	use unlimited resources to produce goods and services to satisfy limited wants.

4 points

QUESTION 3

1. Which resource is NOT one that pertains to the production of rice?

	A.	money
	B.	labor
	C.	capital equipment
	D.	fertile land

4 points

QUESTION 4

1. Zoe's grandparents are excited about finally paying off their mortgage because, as they say, "Our cost of housing is now zero." Zoe should explain to them the economic concept of:

	A.	efficiency: If their cost of housing is now zero, they should let Zoe move in without charging her any rent. Zoe is better off, and her grandparents aren't hurt.
	B.	marginal analysis: if the additional cost of housing is zero, then their additional benefit is also zero.
	C.	equity: it is unfair that some people are still paying off their mortgage.
	D.	opportunity cost: by living in the house, they are giving up the opportunity to sell the house, buy a smaller one, and pocket the difference.

4 points

QUESTION 5

1. When someone says resources are scarce, this suggests that:

	A.	choices must be made to utilize resources in the best manner possible.
	B.	additional resources could be found if there were additional funds allocated to the effort.
	C.	we have enough resources to meet all of our needs and wants.
	D.	lower-income individuals must be especially careful about the choices they make.

Question 9:

1. Because of trade, a country may:

	A.	avoid opportunity costs.
	B.	consume inside its production possibility frontier.
	C.	consume outside its production possibility frontier.
	D.	find its production possibility frontier shifting outward.

4 points

QUESTION 10

1. The economy with the LOWEST opportunity cost of producing a particular good is said to have a(n):

	A.	technological advantage.
	B.	increasing opportunity cost.
	C.	production possibility frontier.
	D.	comparative advantage.

QUESTION 13

1. If goods A and Z are complements, an increase in the price of good Z will:

	A.	decrease the demand for good A.
	B.	increase the demand for good A.
	C.	decrease the demand for good Z.
	D.	decrease the demand for both good A and good Z.

4 points

QUESTION 14

1. Which statement illustrates the law of demand?

	A.	Fewer people play golf because incomes are lower.
	B.	Consumers buy more personal computers because prices have fallen.
	C.	Oil companies drill for new sources because prices are higher.
	D.	An increase in tuition encourages more students to enroll in college because the quality of education has risen.

4 points

QUESTION 15

1. Which factor will NOT cause an increase in the supply of good X?

	A.	an increase in the number of firms that sell good X
	B.	a decrease in the price of labor used to produce good X
	C.	an increase in the price of inputs used to produce good X
	D.	an improvement in the technology used to produce good X

4 points

QUESTION 16

1. Which factor would NOT cause the supply curve to shift?

	A.	a change in the price of the good
	B.	a change in factor costs
	C.	a change in suppliers' expectations of future prices
	D.	a change in the technology of production

4 points

QUESTION 17

1. Market equilibrium occurs when:

	A.	the market clears.
	B.	quantity demanded equals quantity supplied.
	C.	there is no incentive for prices to change in the market.
	D.	there is no incentive for prices to change in the market, quantity demanded equals quantity supplied, and the market clears.

4 points

QUESTION 18

1. In response to a negative supply shock, the government decreases taxes. The MOST likely result of the government's tax decrease is a(n) _____ in unemployment and a(n) _____ in the aggregate price level.

	A.	decrease; increase
	B.	decrease; decrease
	C.	increase; decrease
	D.	increase; increase

4 points

QUESTION 19

1. The Federal Reserve can influence financial crises because it:

	A.	conducts monetary policy.
	B.	determines tax rates.
	C.	determines government spending.
	D.	is responsive to the people who elected its members to office.

4 points

QUESTION 20

1. Which factor is NOT a tool of fiscal policy?

	A.	changing tax rates
	B.	changes in the money supply
	C.	government purchases of goods and services
	D.	government transfers